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Mon 22 Nov 2010 07:22 PM

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Murban falls from 3 year high as refiners balk at premiums

Refiners slowed down purchases as the prices were too expensive

Murban falls from 3 year high as refiners balk at premiums
Murban surged to highest level since September 2007 due to increase in Asian demand with high yield of middle distillates (Getty Images)

Murban crude fell from a three year high against its benchmark as refiners slowed purchases on concerns prices were too expensive.

Murban, produced by Abu Dhabi National Oil Co, dropped 10 cents for January loading to a premium of 68 cents a barrel above its official selling price, according to data compiled by Bloomberg. Lower Zakum, also produced in the emirate, declined 14 cents to a premium of 72 cents.

Murban had surged to its highest level since September 2007 amid an increase in Asian demand for supplies with a high yield of middle distillates, including kerosene and diesel fuel, after basic refining.

Efforts to raise diesel supplies have resulted in a drop in gasoil’s premium to Dubai, a arabian Gulf benchmark for the region, to $13.11 a barrel today after reaching $14.32 on November 15.

JBC Energy in their weekly Asian report said: “The current run on Middle Eastern crude, which is selling like hot cakes in spite of a higher price environment, may have already sucked the market dry of several grades.”

Oman crude for immediate loading increased 2 cents, or 0.02 percent, to $83.07 a barrel, according to Bloomberg data. Dubai for January rose 0.02 percent, to $82.78. Murban dropped 0.1 percent to $84.74.

The Brent Dubai exchange for swaps for January, or EFS, widened 5 cents to $2.95 a barrel, according to data from PVM Oil Associates Ltd. The exchange for swaps for February increased 5 cents to $3.10.

The EFS is the price difference between Brent futures and Dubai swaps contracts and signifies Brent’s premium relative to the Middle East grade.

Oman futures for January delivery rose $1.08 to $82.94 a barrel on the Dubai Mercantile Exchange at 6:04 pm Singapore time, with 1,583 contracts traded. The settlement price was set at $82.63 at 12:30 pm Dubai time.

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